New owner for Market Street

A leasing sign hangs in one of the vacant store fronts at Market Street at Heath Brook Tuesday afternoon. The mall has new owners. The bankruptcy court, which oversaw bankruptcy proceedings of The Ocala Shoppes, approved a plan for the previous owners to pay off debts and for the outdoor mall to change hands. A Delaware-based company paid $16.5 million for the property.

Last Modified: Tuesday, July 9, 2013 at 5:35 p.m.

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A Greenwich, Conn.-based company bought the 60-acre outdoor mall off State Road 200 and west of Interstate 75 for $16.5 million. The sale did not include the 11.4-acre Dillard's Inc. property, which the department store conglomerate purchased earlier this year.

Contrarian Capital Management, LLC, through subsidiary Crefii-Market Street Holdings, LLC, purchased the property at a May auction for a fraction of the mall's original $102 million price tag. A representative of Dallas-based MGHerring Group told the Star-Banner Tuesday that MGHerring Group and Dallas-based Tricom Real Estate Group, also purchased the outdoor mall. Both MGHerring and Tricom develop shopping centers and malls.

MGHerring President and CEO Gar Herring said in an AP story last week the purchase deal involved the two Dallas-based companies and Contrarian. MGHerring will manage the mall. It wasn't immediately clear what the relationship is between the three investors.

Late last month, the U.S. Bankruptcy Court in Tampa approved the sale and disbursements.

Contrarian specializes in buying distressed properties and is owned by its nearly 50 partners and employees. Its portfolio of global assets under management exceeds $3.6 billion, according to documents the company filed with the U.S. Securities and Exchange Commission.

When it comes to real estate, Contrarian buys distressed and undervalued properties in the $5 million to $50 million range, according to the company's website. Its investments vary and have included office buildings and an industrial oil processing firm.

Contrarian representatives did not return telephone calls for this story. Neither did Tricom Real Estate Group, the company that oversees leases for the mall.

Commercial Realtor Bartow McDonald, managing director of Sperry Van Ness in Ocala, said the important issue is now whether the long-term vision for Market Street will change and how effective Contrarian will be at filling the mall's empty stores.

"The new cost basis will give the new owners a lot of flexibility," said McDonald, who was not involved in the sale. "I think it could be a lot more attractive now to local retailers."

But Contrarian could have different plans for the 5-year-old outdoor mall, which is anchored by Dillard's and Dick's Sporting Goods.

One strategy, McDonald said, could be to attract larger tenants. That could include demolishing part of the mall in order to rebuild and offer larger retail spaces instead of the current smaller shops.

"To me that (the prospect of a new long-term strategy) is what's exciting," McDonald said. "Show us a new vision. Show us what great things can happen at this great price."

The purchase of the property was only the latest chapter in a long saga of problems that plagued Ocala Shoppes, LLC, the original owners of the outdoor mall.

Rumors of the mall's financial problems began almost as soon as construction was completed in 2008.

Those rumors only grew when much of the retail space remained empty as the recession wore on. Some vendors sued Ocala Shoppes, claiming they weren't getting paid for services rendered.

The parent company of Ocala Shoppes, United American Realty Corp., denied the rumors of financial problems or that the business would close its doors.

Ocala Shoppes filed for Chapter 11 bankruptcy protection in January. The move came after Bank of America, in 2012, filed a foreclosure suit.

About that time, no one at Tampa-based United American Realty Corp. would answer telephone calls. It still operates a website and lists Market Street as one of its seven large-scale retail plazas.

In the foreclosure lawsuit, Bank of America said Ocala Shoppes owed more than $130.9 million in unpaid loans, fees and charges. That includes $99.2 million on the original mortgage, about $15.3 million in past due interest, and $15.1 million in late charges.

Rather than pursuing the foreclosure lawsuit, Bank of America agreed to the May auction, according to bankruptcy court documents. Of the $16.5 million sales price, the bank is scheduled to receive about $14 million.

Court documents show that Ocala Shoppes was struggling to find tenants ever since the outdoor mall opened its doors in 2008. That led to problems making debt payments to Bank of America and paying off the mortgage as scheduled in 2010.

McDonald said he was not surprised at the final $16.5 million sales price.

He said it was an accurate reflection of the market and such a relatively low price allows for people to take over struggling commercial real estate and infuse it with new life.

The purchase shows that the property has great promise, and that Contrarian saw its financial possibilities.

<p>The Market Street at Heath Brook shopping mall has new owners, the culmination of a lengthy and complex foreclosure, bankruptcy and auction process.</p><p>A Greenwich, Conn.-based company bought the 60-acre outdoor mall off State Road 200 and west of Interstate 75 for $16.5 million. The sale did not include the 11.4-acre Dillard's Inc. property, which the department store conglomerate purchased earlier this year.</p><p>Contrarian Capital Management, LLC, through subsidiary Crefii-Market Street Holdings, LLC, purchased the property at a May auction for a fraction of the mall's original $102 million price tag. A representative of Dallas-based MGHerring Group told the Star-Banner Tuesday that MGHerring Group and Dallas-based Tricom Real Estate Group, also purchased the outdoor mall. Both MGHerring and Tricom develop shopping centers and malls.</p><p>MGHerring President and CEO Gar Herring said in an AP story last week the purchase deal involved the two Dallas-based companies and Contrarian. MGHerring will manage the mall. It wasn't immediately clear what the relationship is between the three investors.</p><p>Late last month, the U.S. Bankruptcy Court in Tampa approved the sale and disbursements.</p><p>Contrarian specializes in buying distressed properties and is owned by its nearly 50 partners and employees. Its portfolio of global assets under management exceeds $3.6 billion, according to documents the company filed with the U.S. Securities and Exchange Commission.</p><p>When it comes to real estate, Contrarian buys distressed and undervalued properties in the $5 million to $50 million range, according to the company's website. Its investments vary and have included office buildings and an industrial oil processing firm.</p><p>Contrarian representatives did not return telephone calls for this story. Neither did Tricom Real Estate Group, the company that oversees leases for the mall.</p><p>Commercial Realtor Bartow McDonald, managing director of Sperry Van Ness in Ocala, said the important issue is now whether the long-term vision for Market Street will change and how effective Contrarian will be at filling the mall's empty stores.</p><p>"The new cost basis will give the new owners a lot of flexibility," said McDonald, who was not involved in the sale. "I think it could be a lot more attractive now to local retailers."</p><p>But Contrarian could have different plans for the 5-year-old outdoor mall, which is anchored by Dillard's and Dick's Sporting Goods.</p><p>One strategy, McDonald said, could be to attract larger tenants. That could include demolishing part of the mall in order to rebuild and offer larger retail spaces instead of the current smaller shops.</p><p>"To me that (the prospect of a new long-term strategy) is what's exciting," McDonald said. "Show us a new vision. Show us what great things can happen at this great price."</p><p>The purchase of the property was only the latest chapter in a long saga of problems that plagued Ocala Shoppes, LLC, the original owners of the outdoor mall.</p><p>Rumors of the mall's financial problems began almost as soon as construction was completed in 2008.</p><p>Those rumors only grew when much of the retail space remained empty as the recession wore on. Some vendors sued Ocala Shoppes, claiming they weren't getting paid for services rendered.</p><p>The parent company of Ocala Shoppes, United American Realty Corp., denied the rumors of financial problems or that the business would close its doors.</p><p>Ocala Shoppes filed for Chapter 11 bankruptcy protection in January. The move came after Bank of America, in 2012, filed a foreclosure suit.</p><p>About that time, no one at Tampa-based United American Realty Corp. would answer telephone calls. It still operates a website and lists Market Street as one of its seven large-scale retail plazas.</p><p>In the foreclosure lawsuit, Bank of America said Ocala Shoppes owed more than $130.9 million in unpaid loans, fees and charges. That includes $99.2 million on the original mortgage, about $15.3 million in past due interest, and $15.1 million in late charges.</p><p>Rather than pursuing the foreclosure lawsuit, Bank of America agreed to the May auction, according to bankruptcy court documents. Of the $16.5 million sales price, the bank is scheduled to receive about $14 million.</p><p>Court documents show that Ocala Shoppes was struggling to find tenants ever since the outdoor mall opened its doors in 2008. That led to problems making debt payments to Bank of America and paying off the mortgage as scheduled in 2010.</p><p>McDonald said he was not surprised at the final $16.5 million sales price.</p><p>He said it was an accurate reflection of the market and such a relatively low price allows for people to take over struggling commercial real estate and infuse it with new life.</p><p>The purchase shows that the property has great promise, and that Contrarian saw its financial possibilities.</p><p>"The worst is behind us," McDonald said.</p>